Devaluation: Another Step Towards 'Capitalist' Chinese Economy

So It looks another step towards opening Chinese economy. By devaluing  the Yuan twice in two days , The Communist China has fallen in western trap. It has done what US and IMF wanted to do it. IMF was quick enough to welcome the move.  "China's new mechanism for setting the daily reference rate for the yuan was a "welcome step", said IMF . China is desperate to enter the IMF's elite global currency club. And it is possible only with market-driven exchange rate.China has  been under international pressure to allow its currency to be driven by market forces as opposed to by the government for years. The US has been its biggest critic - saying that Beijing keeps the currency artificially low to help boost exports.As many analysts believe by devaluing its currency on Tuesday and Wednesday, the message is clear that China's economic scenario is reaching desperation point. China devalued its currency against the US Dollar by 1.69 % on Tuesday and again by 1.6 % on Wednesady. The double devaluation should make is export cheaper by over 3 %. But devaluations are unlikely to have an immediate effect on exports. DBS Bank says "A proper devaluation is 10 - 30%, and it has to stay the course for a year before exports start to show any change".Now the big question is: why did China go for devaluation of is currency? Is it a knee jerk reaction to weak export and economic slowdown. Exports are down by 8 percent than last year.Recent reports suggest China growth rate has slowed down and It is likely to be overtaken by India soon.  China is one of the world's largest economies, but also one of the most fragile. In the last few months, its stock market has seen an incredible rise in prices. Those prices have now been crashing down. Over the past few years, a socialist China  has come to be a huge force in capitalism, mainly based on the growing affluence of its middle class. The four largest companies in the world are Chinese banks. Major American companies depend on the health of China's economy, and its stock market, for their revenues. Apple points to its growth in China as a bright point; with $13.2 billion in sales there, China is the company's second-biggest market after the U.S. with revenues jumping 112% in the past year. China and its taste for mass luxury is why the gold iPhone exists. Whenever there's government intervention in the market, there's the promise of panic. China just put together almost $500 billion in cash to help restore confidence in its stock market, and the country is threatening to arrest stock traders if stock prices keep dropping. It also banned people who own a lot of stock from selling their shares. China's main stock index — the Shanghai Composite — dropped more than 30% from mid-June to early July. The Shenzhen market, which is loaded with Chinese tech stocks, lost more than 40%.  Chinese stocks lost about $3.9 trillion in value. It looked like the market could be on the verge of a total collapse.Due to the wild swings, more than half of listed Chinese companies have taken the drastic step of suspending their own shares. Half the companies on the Chinese stock market aren't even trading, and stocks are still crashing. Probably, the sudden market crash could be one of the reasons for devaluation. But then less exports could lead to workers' unrest. Chinese factories employ millions of people - and any sharp slowdown could affect their livelihoods - and lead to massive job losses, which could make the Chinese government unpopular - and possibly lead to social unrest."Looking at the international and domestic economic situation, currently there is no basis for a sustained deprecation trend for the yuan."China face a sort of dichotomy. Its a socialist economy but being run by capitalist outlook.US and its  capitalist arms- IMF and World Bank- want the last viable socialist set-up to crumble, the way Soviet Union did in nineties.